Qualifications of Microfinance Customers

Business operators can provide small loans to customers when:

– The customer has sufficient financial status or ability to repay debts.

– The customer has domicile or residence in the province where the head office of the business operator is located.

Category 3

Interest Collection, Profit Rate from Lending, Interest on Default Payments, Fines, Service Fees

Clause 4:

Firstly business operators must comply with the following. This regarding the collection of interest, profit rates from lending, interest on default payments, fines as well as service fees. Likewise any other fees and expenses as actually paid and reasonable:

1. Interest and Fees:

Firstly business operators may charge interest, profit rates from lending, default interest, fines as well as service fees. Likewise any other fees concerning provincial-level microloans under supervision.

Secondly when calculated together. These charges must not exceed the specified rate as outlined in the announcement of the Ministry of Finance.

Thirdly collecting interest on default payments must be calculated on the basis of the principal of the installments that the debtor has overdue in each installment.

2. Additional Expenses:

In addition to the interest, profit rates from lending, default interest, fines and service fees. Likewise any other fees under (1), the business operator may collect expenses as actually paid and reasonably possible as stated by the Fiscal Policy Office. These expenses include:

– (a) Expenses that business operators must pay to the government.

– (b) Expenses that the business operator must pay to other persons or outside agencies. Likewise, with verifiable evidence of payment. This can be for a number of services.

– (c) Expenses that cause operating costs to increase due to providing services to customers. Likewise default payment of customer debts, depending on the individual case.

– (d) Expenses for following up and enforcing assets that the debtor has placed as collateral for debt repayment. In the case of a loan with a car registration as collateral, such expenses must be necessary, appropriate, and supported by verifiable evidence. Again this requires legal assistance.

3. Prohibition:

Likewise business operators are prohibited from combining interest, profit rates from lending, default interest, fines as well as service fees. Likewise any other fees under (1) with expenses as actually paid and reasonable under (2) with the outstanding debt amount for calculating interest, interest on default payments, and additional fines.

Clause 5:

To ensure customers are aware of clear information, business operators must:

– Post announcements at the head office and branch offices specifying details about interest, profit rates from lending, default interest, fines, service fees, or any other fees and expenses as actually paid and reasonable regarding provincial-level microfinance under supervision.

– Maintain complete and accurate regulatory documents and store original details about the above information in any form for at least 10 years from the effective date.

– Obtain consent from customers before implementing changes that affect customer benefits, unless customers have agreed otherwise.

– Announce any changes at least 30 days in advance before they take effect.

Clause 6:

– Business operators must provide clear and complete details of interest, profit rates from lending, default interest, fines, service fees, or any other fees and expenses as actually paid and reasonable in prospectus documents, applications, and contracts.

– Contracts must include at least the details as specified.

Clause 7:

– If a business operator lends money with a total credit limit exceeding fifty thousand baht, separate loan contracts must be made for each person:

– One for the total credit limit not exceeding fifty thousand baht.

– Another for the total credit limit exceeding fifty thousand baht.

– Customers have the right to choose which loan repayment contract to pay off first. If the customer does not specify, the business operator must apply the received payment to repay the contract with the higher interest rate first. This ensure that that interest does not grow rapidly.

Category 4

Debt Collection and Follow-Up

Clause 8:

Business operators must follow these procedures for debt collection and follow-up to ensure customers receive clear information:

1. Invoice Preparation:

– Prepare and send invoices to inform customers of their debt obligations, including the due date or account deduction date for each installment, in the format and through the channels agreed upon with the customer. This can be by mail or otherwise agreed upon.

– The invoice must display the total debt amount, overdue debt, and future due amounts, itemized by principal, interest, profit rate from lending, default interest, fines, service fees, any other fees, and actual and reasonable expenses. So ensure that the debt is broken down.

– Invoices must be sent to customers at least once a month and delivered in a timely manner before the due date or first installment deduction date of that month.

2. Receipt Preparation:

– Issue receipts detailing debt payments, itemized by principal, interest, profit rate from lending, default interest, fines, service fees, any other fees, and actual and reasonable expenses for customers to keep as evidence. In short you need to give a breakdown of the account.

3. Notification of Default:

– Send a written notice to customers at least 20 days before initiating legal debt enforcement actions if they default on payments.

– Receipts must follow the format outlined in the attached document to this announcement.

Clause 9:

Business operators must comply with debt collection laws when following up on and collecting debts.

Category 5

Business Operations

Clause 10:

– Business operators must investigate customer complaints regarding the use of provincial-level microfinance services under supervision and inform customers of the progress and next steps within 15 days of receiving the complaint.

– The operator must resolve the complaint promptly and inform the customer as soon as possible.

Clause 11:

– When using marketing media to promote provincial-level microfinance services under supervision, business operators must:

– Communicate the message in an easily understandable manner without exaggerating the truth.

– Provide complete and accurate information, including interest rates, profit rates from lending, default interest, fines, service fees, any other fees, and actual and reasonable expenses related to each type of provincial-level microloan under supervision.

Category 6

Accounting and Reporting

Clause 12:

– Business operators must prepare reports in the format and within the period specified by the Economic Office of the Ministry of Finance, as attached to this announcement.

– These reports must be submitted to the Fiscal Policy Office within 30 days from the end of the month being reported.

Clause 13:

– Business operators are required to submit audited financial statements for the past fiscal year. These statements must be audited by an auditor or tax auditor and signed by a director, authorized person, or managing partner of the business operator.

– The audited financial statements must be submitted to the Fiscal Policy Office within 150 days from the end of the fiscal year. See how to complete this on our website, esle speak to us online or in person.

– If the financial statement report is found to be incorrect or incomplete, the Fiscal Policy Office has the authority to order amendments to be made accurately and completely within the specified period.

Transitional Provisions

Clause 14:

All applications for permission and supporting documents submitted before the effective date of this announcement, and still under consideration, will be considered as requests for permission and supporting documents according to this announcement.

Clause 15:

All loan contracts with clearly stated payment periods made before this announcement will remain in effect until the said debt payments are completed.

Clause 16:

All actions that are offenses under the previous announcements by the Fiscal Policy Office regarding the criteria, methods, and conditions for conducting provincial-level microfinance businesses under supervision, dated March 27, 2019, October 1, 2019, and September 1, 2021, which occurred before the date this announcement came into force, will continue to be handled by those legally responsible or assigned to complete the offense proceedings.

Clause 17:

– This announcement will come into effect from October 1, 2021.

Announced on September 23, 2021

There have been a number of updates to the operations of a micro loan business. These are the basic overviews for each section. There is the micro loan business as a partnership as well as a micro loan business as a registered company. See the terms and conditions as well as all the documents that are required for this, Likewise see on here how to register for VAT as well as how to register a partnership as well as register a company in Thailand.

The non-performing debt in this sector is high compared to the banking sector in Thailand. The banking sector hovers around 2-3% while the micro loan sector hovers around 5-6%. You should consider your resources as well as manage the loan applications carefully or run a high rick in the industry. See also the article on keeping the cost low on debt collections.

Lastly should you have any questions then speak to a lawyer for a Pico license then speak to us online or in person.